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Oregon Lottery will lose money on sports betting this year

Feb 25, 2020, 7:17 am

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Oregon LotteryOregon Lottery: Oregon Lottery will lose money on sports betting this yearRating:

Agency cites higher start-up costs, lower margins and less betting activity than it expected

Oregon Lottery Director Barry Pack will present some unwelcome news at the Lottery Commission's monthly meeting on Feb. 28. Scoreboard, the agency's new mobile sports betting app, will lose money for the fiscal year that ends June 30.

"Lottery will have a loss of $5.3 [million] from the program for the first nine months of FY '20," Pack said in a memo prepared for that meeting.

Prior to launching Scoreboard last October, lottery officials presented lawmakers with projections showing the agency expected sports to be profitable in its first year — making $6.3 million — and pick up speed after that.

Those projections can be found in the table below.

At the Lottery Commission's January meeting, agency officials warned commissioners that results were not as good as expected.

"Original projections have been revised downward to reflect evolving estimates around black market capture rate, lack of NCAA wagering, tax withholding, intrastate competition, margin and product technical issues," officials said in a presentation slide.

This month, Pack put firm numbers on that downward revision, leaving the agency's sports-betting business $11.5 million short of where the lottery had once hoped to finish the year.

Lottery spokesman Matt Shelby attributes the shortfall to a variety of issues.

"We launched a new game (sports) and a new sales channel (mobile) this year, and we knew we would have significant up-front investment," Shelby says in an email. "We also captured all expenses related to launching the game, including indirect ones. Some of those indirect expenses were already represented in other budget areas, and it was a matter of moving them into the sports column."

The lottery put a big emphasis on Scoreboard, its first new major initiative in more than a decade. The agency hoped to use sports betting to attract new gamblers as its existing clientele ages out. The agency's zeal to enter the new arena involved a hurried contracting process and has at times resulted in pushback from legislators.

Last year, legislative leaders attempted quell some of the unhappiness about sports betting by allocating the profits from the new endeavor to helping pay down the state's $25 billion unfunded pension liability — but for now, at least, there are no profits to allocate.

Lottery officials have been working on that, Shelby notes, by seeking legislative approval to make Scoreboard more attractive by including betting on college games as an option. The answer from the Capitol: no dice.

"The ability to offer collegiate wagering would speed our progress towards profitability — increasing revenue with very little additional expense," Shelby says. "But there doesn't seem to be much appetite for that in the Legislature."

News story photo(Click to display full-size in gallery)

News story photo(Click to display full-size in gallery)

Willamette Week, Lottery Post Staff

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6 comments. Last comment 3 months ago by Stack47.
Page 1 of 1
music*'s avatar - DiscoBallGlowing
Fresno, California
United States
Member #157851
August 2, 2014
3811 Posts
Offline
Posted: February 25, 2020, 7:58 am - IP Logged

The Oregon Lottery made a bad bet.  Go Oregon Ducks!

Playing the Lottery is more like a past time than a hobby.

    Avatar
    Simpsonville
    United States
    Member #163184
    January 22, 2015
    2167 Posts
    Offline
    Posted: February 25, 2020, 10:59 am - IP Logged

    I Agree!Time to dump this and get on-line lottery!

      db101's avatar - RB55Ms1

      United States
      Member #202923
      December 14, 2019
      258 Posts
      Offline
      Posted: February 26, 2020, 2:04 am - IP Logged

      Black market capture... I'm not an economist but that sounds to me like something that could be solved with better marketing. What is the biggest drawback of underground betting? If the organizers stiff you, you have no recourse. Play legally with the state, you'll always get paid what you're owed.

        Avatar
        Kentucky
        United States
        Member #32651
        February 14, 2006
        8903 Posts
        Offline
        Posted: February 26, 2020, 4:05 pm - IP Logged

        Agency cites higher start-up costs, lower margins and less betting activity than it expected

        Oregon Lottery Director Barry Pack will present some unwelcome news at the Lottery Commission's monthly meeting on Feb. 28. Scoreboard, the agency's new mobile sports betting app, will lose money for the fiscal year that ends June 30.

        "Lottery will have a loss of $5.3 [million] from the program for the first nine months of FY '20," Pack said in a memo prepared for that meeting.

        Prior to launching Scoreboard last October, lottery officials presented lawmakers with projections showing the agency expected sports to be profitable in its first year — making $6.3 million — and pick up speed after that.

        Those projections can be found in the table below.

        At the Lottery Commission's January meeting, agency officials warned commissioners that results were not as good as expected.

        "Original projections have been revised downward to reflect evolving estimates around black market capture rate, lack of NCAA wagering, tax withholding, intrastate competition, margin and product technical issues," officials said in a presentation slide.

        This month, Pack put firm numbers on that downward revision, leaving the agency's sports-betting business $11.5 million short of where the lottery had once hoped to finish the year.

        Lottery spokesman Matt Shelby attributes the shortfall to a variety of issues.

        "We launched a new game (sports) and a new sales channel (mobile) this year, and we knew we would have significant up-front investment," Shelby says in an email. "We also captured all expenses related to launching the game, including indirect ones. Some of those indirect expenses were already represented in other budget areas, and it was a matter of moving them into the sports column."

        The lottery put a big emphasis on Scoreboard, its first new major initiative in more than a decade. The agency hoped to use sports betting to attract new gamblers as its existing clientele ages out. The agency's zeal to enter the new arena involved a hurried contracting process and has at times resulted in pushback from legislators.

        Last year, legislative leaders attempted quell some of the unhappiness about sports betting by allocating the profits from the new endeavor to helping pay down the state's $25 billion unfunded pension liability — but for now, at least, there are no profits to allocate.

        Lottery officials have been working on that, Shelby notes, by seeking legislative approval to make Scoreboard more attractive by including betting on college games as an option. The answer from the Capitol: no dice.

        "The ability to offer collegiate wagering would speed our progress towards profitability — increasing revenue with very little additional expense," Shelby says. "But there doesn't seem to be much appetite for that in the Legislature."

        News story photo(Click to display full-size in gallery)

        News story photo(Click to display full-size in gallery)

        It looks like they underestimated the overhead, but if those costs are not reoccurring, they should be fine. Is Online poker part of their package?

        Mister we could use a man like Herbert Hoover again

          Avatar
          Chasing $ Millions.
          White Shores- California
          United States
          Member #136473
          December 12, 2012
          6148 Posts
          Offline
          Posted: February 26, 2020, 7:53 pm - IP Logged

          It looks like they underestimated the overhead, but if those costs are not reoccurring, they should be fine. Is Online poker part of their package?

          Did you say underestimated?  Kinda like Deontay Wilder underestimating Tyson Fury..Approve

           * Voice of Reason *   

           

          People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

            Avatar
            Kentucky
            United States
            Member #32651
            February 14, 2006
            8903 Posts
            Offline
            Posted: February 26, 2020, 8:29 pm - IP Logged

            Did you say underestimated?  Kinda like Deontay Wilder underestimating Tyson Fury..Approve

            Wilder blamed the 40 pound costume he wore into the ring.

            Mister we could use a man like Herbert Hoover again